For too long, global corporations have been able to use elaborate avoidance mechanisms to get out of paying their fair share of corporate tax. So last week’s ruling from the European commission that the Irish government must recoup €13bn (£11bn) in back taxes from Apple should be unreservedly welcomed.

Apple, which the European commission revealed paid an effective corporation tax rate of just 0.005% on its European profits in 2014, is far from the only culprit. Amazon paid just £11.9m in tax in the UK by routing its £5.3bn of British sales through its Luxembourg subsidiary. Google similarly paid just £20.4m tax despite UK sales of £3.8bn in 2013.

At the root of the problem is the out-of-date international tax system, developed almost a century ago. Over time, it has become increasingly exploited by multinationals to shift profits to tax havens: in 2012, US multinationals shifted more than a quarter of their profits to avoid tax. In the meantime, the share of government revenue from corporation tax has fallen in countries such as the US and the UK.

These arrangements may be strictly legal, but they fail basic tests of economic and social justice. The bigger a company, the more aggressive it can be in lobbying tax authorities. In Apple’s case, it struck a deal with the Irish government that allowed it to allocate its European profits to a shell company not registered for tax in any country. This is not only unfair to smaller companies that have to pay tax; it is bad for economic growth, allowing corporate giants to entrench their position, impeding innovation and competition.

Tax avoidance breaks a fundamental social contract: companies that draw on public investment in skills and infrastructure to make vast profits should put something back. Why should Amazon make barely any contribution to Treasury coffers while its vans use UK roads and it employs workers whose education was paid for by the British taxpayer? Even worse, these tech giants extract profit without paying tax in some of the world’s poorest countries.

The answer ultimately lies in wholesale reform of international tax rules, so that multinationals are obliged to pay tax based on some measure of economic activity in each country, whether sales, employment or assets. But while there have been some fledgling steps in the right direction by the OECD, the body responsible for international tax rules, we remain a long way from such a comprehensive reform. International tax reform remains subject to lobbying by powerful corporate interests, meaning it is proceeding at a glacial pace.

The EU has played a more activist role: it was at the forefront of important rule changes that cracked down on global tax avoidance in the late 1990s and the European parliament has consistently pushed for greater transparency. The commission has developed proposals for reforms that would see companies pay tax relative to the level of economic activity in each EU country.

Its proposals illustrate how international co-operation can increase a country’s tax sovereignty. By developing international agreement around the principle, companies pay tax on the basis of their economic activity, taxed in a way and at a rate to be determined by national governments; this system avoids countries getting trapped in a race to the bottom on corporation tax. It takes power away from corporations and puts it back in the hands of the nation state.

The great irony is that just as the EU is starting to make inroads on this issue, Britain has voted to leave, based on old-fashioned arguments about national sovereignty that make little sense in the modern world. Global challenges such as tax avoidance, climate change and microbial resistance are borderless and cannot be addressed by nations acting alone. In light of this, perhaps it is unsurprising that some of the most vocal proponents of Britain leaving the European Union have argued that the Irish approach of low corporation tax and sweetheart deals could provide a model for the UK economy post-Brexit.

Despite George Osborne’s noises about a new “march of the makers”, the Irish approach is a direction in which we have been quietly heading for some time. His time at the Treasury was marked by steady cuts to corporation tax – at great expense – at the same time as the government cut investment allowances and subsidies for R&D. The government has done precious little to pursue tax avoidance domestically and has been a significant block to international tax reform at the OECD and EU. Theresa May and Philip Hammond have done little to signal that they will deviate from this approach.

But it is a blind alley for Britain. As Fintan O’Toole argues elsewhere in this newspaper, the Irish approach was a strategy of last resort for a tiny economy in dire straits. It could not work for Britain. No significant economy has achieved growth by slashing corporation tax: countries that have enjoyed the greatest economic success have done so by creating the conditions in which high-growth businesses can flourish, driving innovation and creating jobs. And the world is changing as we move towards greater tax transparency and companies are more aware than ever of the reputational damage of avoiding tax.

Moreover, is this really the future we want for British business in a Brexit world? One that is based on attracting corporate giants with accounting fiddles designed to help them cheat not just our near neighbours, but developing countries, out of their fair share of tax. Not to mention cheating Britons and the state by deliberately reducing the amount they pay to the state, money that will be lost to our roads, schools, hospitals. As O’Toole makes clear, in an age of inequality and financial uncertainty, this approach is not tenable. We are witnessing a rise in populist anger precisely because “elites” are seen to be playing by different rules. Fairness is at the heart of a stable society. It is not at the heart of Apple’s tax deal in Ireland.